Surprisingly, economists generally agree that the housing market appears to be bottoming out this summer and should improve in 2013. Although home price increases are expected to be modest, and in some cities home prices are still declining, according to the S&P/Case-Shiller home price data, prices appear to be holding.
Despite Conference Board reports that consumer confidence dropped in August to the lowest level since late last year, a recent survey by Fannie Mae revealed that 73 percent of the 1,001 Americans asked believe that it is a good time to buy a home. Factors contributing to this are record low interest rates — in the mid-3 percent range in mid-July — and home prices at 2002 levels in some areas making housing more affordable.
Recent increases in rents and low vacancies also contribute to buyers once again favoring buying rather than renting. The Joint Center for Housing Studies at Harvard University recently released its “State of the Nation’s Housing” report, which reported that housing markets show “definitive signs of a turnaround.” With low housing affordability and increasing rents, it’s now cheaper to own a home in many markets than rent the same home, according to the study.
With recent speculation suggesting that we could be headed for a recession, many prospective homebuyers are still not convinced that now is the time to buy a home. However, if rents are rising and the inventory of rentals on the market is very low, buying becomes an attractive option even though the economy may stumble